Home / Knowledge / News / Textiles / Raising labour productivity key to push GDP growth: Ind-Ra

Raising labour productivity key to push GDP growth: Ind-Ra

Jan '20
Pic: Shutterstock
Pic: Shutterstock
India will have to raise its labour productivity growth to 6.3 per cent to achieve 8 per cent gross domestic product (GDP) growth, according to India Ratings and Research (Ind-Ra), which recently said to attain 9 per cent GDP growth, labour productivity growth will have to be raised to 7.3 per cent. The labour productivity growth in fiscal 2018-19 was 5.2 per cent.

India’s labour productivity growth between fiscals 2004-05 and 2007-08 was 8.5 per cent. It came under pressure in the aftermath of the 2008 global financial crisis. However, it recovered thereafter and grew at 5.8 per cent from 2015-16 to 2018-19.

The challenge on the productivity front for India is two-fold, Ind-Ra said in a press release. First, how to raise the overall labour productivity to a level that delivers the required GDP growth rate, and second, how to lift the labour productivity in the lagging sectors so that growth is more evenly balanced and sustainable over the medium- to long-term.

Sectors like manufacturing (7.2 per cent), electricity, gas, and water supply (7.7 per cent), transport, storage, and communications (7.4 per cent), and community, social, and personal services (6.2 per cent) contributed significantly to the overall labour productivity between 1999-2000 to 2015-16. The sectors that lagged are construction, agriculture and mining, which recorded labour productivity growth of 0.4 per cent, 3.2 per cent and 4.8 per cent respectively. On the contrary, China maintained a labour productivity of 6.5 per cent and above across all sectors during the same period.

Ind-Ra believes a closer monitoring of the sources GDP growth is vital. As labour productivity is only one-factor or partial-factor productivity measure explaining GDP growth, decomposing the factor inputs into quantity of labour, quality of labour, information and communication technology (ICT) capital, non-ICT capital and total factor productivity (TFP) provides a better perspective on the sources of GDP growth.

The company believes the quantity of labour along with the non-ICT capital will continue to contribute significantly to the GDP growth due to the demographic composition. But, any decline in the contribution of quality of labour and ICT capital is a matter of concern.

While the inability of the workforce to upgrade its skill in line with the technological, business, managerial changes in the Indian economy appears to be the reason for the former, a slowdown in capital expenditure lately appears to be the cause for the latter.

Productivity-related challenges can have an adverse impact on economic expansion, profit growth and societal welfare in India. Since longer and sustainable productivity growth critically depends on how much businesses invest in innovation, knowledge, and intangible capital, and how committed governments are to structural reforms, Ind-Ra believes it is imperative that structural changes in the factor, product and labour markets are given priority.

Fibre2Fashion News Desk (DS)

Must ReadView All

Pic: Shutterstock

Textiles | On 21st Jan 2020

CEO pessimism over global growth reaches record high: PwC

Chief executive officers (CEOs) are highly pessimistic about the...

Pic: Shutterstock

Apparel/Garments | On 21st Jan 2020

Allow exporters to partly sell to foreign outlets: BGMEA

The Bangladesh Garment Manufacturers and Exporters Association...

Pic: Shutterstock

Textiles | On 21st Jan 2020

New fabric factory to be set up in Vietnam

The Viet Tien Garment Joint Stock Corporation recently signed up with ...

Interviews View All

Neel Sawhney, One Friday

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Jurgen Gauger, Spreadshirt

Jurgen Gauger

‘Buying crowdsourced or creative designs are much more appealing to the...

Asim Dalal, Indo Count Retail Ventures

Asim Dalal
Indo Count Retail Ventures

Today, there is no other emerging market as India, "we make in India and...

Alphonse Reddy,

Alphonse Reddy

Bangalore-based Sunday designs and makes mattresses and accessories that...

Jos Notermans,

Jos Notermans

SPGPrints is a global provider of integrated solutions for rotary screen...

Iacopo Pardini,

Iacopo Pardini

Founded in 1953, Italian engineering company Arioli Spa started...

Mohammad Hassan, Biax Fiberfilm

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Johan Berlin, InvestKonsult Sweden AB

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Sachin Pendharkar, Dieffenbacher India Pvt Ltd

Sachin Pendharkar
Dieffenbacher India Pvt Ltd

Germany-based Dieffenbacher Group is a producer of high-quality composites ...

Anisha Chaudhari, Threads & Shirts

Anisha Chaudhari
Threads & Shirts

Threads & Shirts is a freshly-tailored concept providing men/women a...

Wendell Rodricks, Wendell Rodricks

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Sandeep and Sarah Shaikh Gonsalves, SS Homme

Sandeep and Sarah Shaikh Gonsalves
SS Homme

SS Homme celebrates the craft of traditional tailoring through the bespoke ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

January 2020

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

Advanced Search